Tom Busby owes $32,000 now. A lender will carry the debt for six more years at 7

Question

Tom Busby owes $32,000 now. A lender will carry the debt for six more years at 7 percent interest. That is, in this particular case, the amount owed will go up 7 percent per year for six years. The lender then will require Busby to pay off the loan over 14 years at 10 percent interest. What will his annual payments be? Use Appendix A and Appendix D. (Round "FV Factor" to 3 decimal places and final answer to 2 decimal places. Omit the "$" sign in your response.) Annual payments $ http://lectures.mhhe.com/connect/0073530727/Images/Appendix_A.JPG http://lectures.mhhe.com/connect/0073530727/Images/Appendix_D.JPG

Explanation / Answer

32000*FV(7%,6) =32000*1.501= 48032 PVa/Pvifa = 48032/7.367= 6519.89

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